Client threshing of tobacco and client processing of raw cashew to recover kerenels thereof not liable to service tax
Notification No. 14/2004-ST dated 10.09.2004inter-alia exempts business auxiliary service in relation to processing of goods for, or on behalf of the clients when provided ‘in relation to agriculture’. It has been clarified that the following are covered within the expression ‘in relation to agriculture’ and thus are eligible for exemption provided in Notification No. 14/2004-ST dated 10.09.2004:
(i) process of threshing and drying of tobacco leaves and thereafter packing the same; and
(ii) processing of raw cashew involving roasting/drying, shelling and peeling of raw cashew to recover kernel
The Board has clarified that tobacco or raw cashew, which are subject to client processing retain their essential characteristics at the output stage and therefore the processes undertaken on behalf of client should be considered as covered by the expression ‘in relation to agriculture’.
Further, it has been clarified that where the commission agents stationed abroad provide business auxiliary service to promote the export of rice, said business auxiliary service is covered byNotification 13/2003-ST (as amended) because, the word ‘rice’ is mentioned under the explanation to the term ‘agricultural produce’, in the inclusive portion along with other items like cereals, pulses, etc.